UK Rejects New EU Treaty, Says Not In Britain's Interests

Prime Minister David Cameron has rejected a new European Union treaty saying that what was on offer was "not in Britain's interests". Speaking after overnight talks in Brussels amongst leaders of EU countries Cameron said:

"I said before coming to Brussels that if I couldn’t get adequate safeguards for Britain in a new European treaty, then I wouldn’t agree to it. What is on offer isn’t in Britain’s interests, so I didn’t agree to it.

Let me explain why this matters. Of course, we want the eurozone countries to come together and to solve their problems. But we should only allow that to happen inside the European Union treaties if there are proper protections for the single market and for other key British interests."

Cameron's position did not impress French leader Nicolas Sarkozy, who said: "You cannot have an opt-out and then ask to participate in all the discussion about the euro that you did not want to have, and which you also criticised."

Early this morning, EU leaders agreed on a new 'fiscal compact' in which general government budgets shall be balanced or in surplus, a rule which will be introduced into national legal systems at constitutional level. Breaches of the rule will be punished by the Court of Justice, said EU leaders.

Long term, EU leaders plan to deepen fiscal integration and work towards a common economic policy. They confirmed that the European Financial Stability Facility (EFSF) will be leveraged and agreed on an acceleration of the implementation of the European Stability Mechanism (ESM) treaty by July 2012. The 500 billion-euro ceilings of both bailout funds will be reconsidered by March 2012, said the leaders.

Europe is mired in a national debt crisis caused by a combination of recession, excessive government debt and spending, and speculation on secondary bond markets. The crisis has damaged banking cash flow and credibility, negatively impacting investment in business and the economy. The countries that have been deeply affected are Ireland, Italy, Spain and Portugal. Cyprus is on the brink of entering the EFSF unless it can reverse its deficit - set to be 6.7 percent of GDP by the end of the year.

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